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You May Need a Nonowner Car Insurance Even If You Don't Own a Car

Owning a car can be a pretty pricey endeavor, especially around metro areas when you add in all the related costs from monthly payments and property tax to auto insurance premium to upkeep cost.

That's probably the biggest reason for the declining ownership among younger Americans in recent years.  A sudden rise to variety of car rental and sharing options surely contributed to that trend as well.

If you don't own a car but do drive quiet frequently, even 5-6 times a month, you should check out what's called, "Nonowner car insurance". It typically costs a few hundred dollars a year to cover your liability. An equivalent coverage from a rental car company usually costs a minimum of $10 / day.

One thing to keep in mind is that "nonowner car insurance" usually provide liability coverage only, meaning you should still opt for collision damage waiver if you are renting a car.

"Nonowner car insurance provides protection for an accident when you're at fault, so it covers the other driver's car, but not yours, and the other driver's injuries, but not yours," he says.

The policies generally don't include comprehensive or collision coverage for damage to the car because you don't own the vehicle. Ramsey says the insurance will cover you in any car you drive during the policy period.

Then What's the Point of Getting Nonowner Car Insurance?

People buy nonowner car insurance to protect their financial assets in the case of an at-fault accident.  Getting behind the wheel is fairly risky business, and it can leave a huge dent in your financial status if you are not protected by such a policy.

You belong to a car-sharing service, such as Zipcar. The service will provide some insurance coverage, but, "If you hurt someone in a car accident, the liability lawsuit is likely to be against both you and the car-sharing company," says Steven Visco, president of C.H. Edwards Inc., an insurance agency in Farmingdale, N.Y..

You borrow other people's cars often. When you borrow a car from a friend or a relative, the car owner's insurance covers you, says Ron Moore, senior product manager for MetLife Auto & Home in Minneapolis.

However, if you're borrowing a car from someone you don't know well, you may not know if their liability coverage is adequate to protect you.

"If you're at fault and the other driver's injuries exceed the car owner's liability, then you may be stuck paying the bill," Moore says.

You have a problematic driving record. "In Virginia, the state mandates nonowner car insurance coverage for drivers who don't own a car but have had a major problem driving, such as a DUI or DWI, or some other major violation like driving on a suspended license," says Ramsey. He adds that the premium for this mandated liability coverage is about $600 for six months.

If you don't own a car but still drive regularly, you may want to get a nonowner car insurance quote to find out if this coverage is appropriate and affordable for you.

You May Need a Nonowner Car Insurance Even If You Don't Own a Car Reviewed by Blogs on 8:34 PM Rating: 5

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